How do people get filthy rich in real estate?!

General Real Estate Investing
1

I know it is possible to get extremely wealthy from investing in real estate. I am just having difficulty finding a source that can give me a case study or example of how someone would get rich. Do people just buy mass amounts of duplexes and apartments and eventually pay of the mortgage and live off their tenants rent after? Or are there other ways i haven’t read about yet.

Im planning on making a transition into real estate investing and have been reading many books and forums lately. I figure i would start with wholesaling and work my way up through flipping houses and renting multifamily houses. I want to become a millionaire someday and retire young (i’m 21 now) with passive income flowing in. Could someone please help me understand how people become very wealthy through real estate! Thanks

2

ryguy,

You’ve got a worthy goal, and it’s certainly attainable.

There’s no ‘one way’ to accomplish what you’re after, except that there is one thing that will put you ahead…all things being equal.

That one thing includes three elements:

  1. Knowing what you want.
  2. Setting a deadline for when it must happen.
  3. Giving yourself no alternatives.

Very few people get this.

There’s some good news and some bad news.

The bad news:

The goals that you’ve stated are too vague and dull sounding.

“Retire early” isn’t specific enough. Retire, and then what? Have a stroke and die? Retire early at 64? Or 25? Or when, besides “early?”

Retire with $1M in the bank? Well, think about what a 4% return on that amount gives you. Can you retire on $40K a year?

As an aside, you used the word “filthy rich” in your question.

Subconsciously, you consider being rich as ‘filthy.’ In fact, that term came to your mind, and was the phrase you settled on. That reflects your deep-seated, negative attitude toward wealth.

If you had asked, “How do people become financially independent in real estate?” that would have reflected a much better perspective and mental picture, than getting ‘filthy’ at something.

Words mean everything to us.

OK, before I descend hopelessly into pop-psychology hell, let me just say that you would do yourself a huge favor by reading and internalizing the information from Tony Robbins’ books, “Awaken the Giant Within” and “Unlimited Power.”

They contain powerful information that will help you organize and focus your thoughts (and actions) on achieving the goal(s) you’re after.

Here’s one short cut I took from Tony Robbins that was helpful to me.

Go to a quiet and relaxing place, away from distractions. Give yourself time to write down in as much specific detail as possible, your ideal life, including your character, accomplishments, lifestyle, possessions, activities, relationships, and anything else that comes to mind.

It took one of my friends half a day to do this the first time. Yes, you can do it more than once.

It took me about an hour …Hey, I’m a fast writer, with low vision, and no imagination, what can I say? OK, Just kidding!!!

The good news:

Once you’ve given yourself something to focus on, along with a deadline, and no alternatives, your subconscious mind will start immediately working to help you reach your objectives nearly effortlessly.

BTW, your subconscious mind makes no distinction between fact and fiction. It believes whatever you tell it, or whatever you tell yourself. It’s just a sponge that absorbs whatever you soak it in. However, your subconscious mind affects everything about you, including your outlook, attitudes, intuition, and actions.

So, it’s critically important that you both direct and control your conscious thoughts. That includes expressing verbally, and physically supporting, whatever it is that you want, and telling yourself you already have it.

This is super-performance psychology. It’s not for the timid.

Meanwhile, dream big, be specific, put a deadline on it, give yourself no options, tell yourself you’ve already achieved it …and the “how(s)” will come.

3

This is something that javipa says that is very important. People will almost always take the path of least resistance. Nobody ever gets rich by accident. I know a lot of rich people. Most of them had no option available to them besides get rich. If you have the ability to get a company to pay you $100k or more a year you will almost always opt to do that instead of making yourself rich. Almost none of the rich people I know are classically smart.

You sound like a smart person (classically smart) what gets in the way of a great life is a good life. You need to resist thinking that having a good job is the goal. It is a step on the path but keep moving toward the goal.

4

Thanks for the replies! As you can see i am new to this so i appreciate your advise. I would much rather be “financially independent”, i just used “filthy” as a way to grasp peoples attention. I will be sure to use more appropriate words in the future to portray what i am looking for.

I have read Rich Dad, Poor Dad and understand everything your saying about being able to put yourself in the right mindset. Being able to think like a millionaire is extremely important and will look into the books you suggested.

I am looking to be financially independent with over $1,000,000 a year (Ultra Rich) within 15 years. I understand that real estate investing is very broad but i am still looking for an example as to how someone would acquire this much wealth over the years? Do they invest in multiunit (50+) apartment buildings? Do they flip houses and pocket the profits? What do sophisticated investors do to make so much money? Could you please give me some case studies in which people have gotten wealthy? Thanks!

5

You can’t buy a 50+ unit apartment building with no money down.

You have to google real estate gurus and research their history. There’s internet articles out there that Robert Kiyosaki was not a real estate investor when he wrote those books, but just a writer and a public speaker.

There’s value in researching every real estate guru. Donald Trump used his father’s wealth and made more money, so what he did may not seem achievable to your situation, but if you examine him more closely, his dad, Fred Trump, was also a real estate investor and started from nothing and had $400m by the time his passed away. But, he had to do it over a lifetime and started by building middle class houses in New York after moving from NY to British Columbia for a job managing a restaurant and hotel in British Columbia during the Klondike Gold Rush which allowed him to save the money he needed to get started in New York real estate. So there may be value in examining what his father did, which you may have passed by if you didn’t research Don.

6

We could give you a ‘case study,’ but the fact is, it’s just a case study. It’s not really experience. It’s just proof of potential. Well, we already believe it’s possible, so why depend on a case study? Just to prove the obvious?

Of course we don’t want a case study. We want a trail to follow; a step-by-step plan. Well, step-by-step plans are often created by taking the first step.

In our case, we’ve taken the first step by establishing a goal and a deadline. Now, we just need a commitment that eliminates other options, or a Plan B, that would make it “OK” to abandon the first goal.

Just for giggles, let’s say that we’ve got our goal, our deadline, and no alternatives.

We look for ways to both create and bring value to others.

As an aside, the goal can’t be just about making the money. Otherwise it’s gonna be an empty journey, where the last thing we do is stand on top of a tall building, strafing passer-byes with a rifle, before killing ourselves.

Meanwhile, we’ve set a deadline of 15 years. Guess what? That’s exactly how long it’s going to take us, because we’ve told our brains that this is how long it ‘can’ take. So, naturally, that’s how long it WILL take.

Sounds crazy? It’s not.

Do you remember how long it took to complete a paper in high school? It took exactly as long (or longer) than the time we were given. Right?

That’s how it works in real life. Everything takes just as long as we’ve given ourselves permission for it to take. (I’m preaching to myself here…)

You know what’s really uncomfortable? Short deadlines. In fact a short fuse can genuinely create drama and trauma for us. Guess what else? After the goal is achieved, we forget about the drama and trauma involved, and only enjoy the fruits of our achievement.

Guess what else happens with short deadlines? Our brains don’t know whether the deadline is ‘too short,’ or not. It just believes what we say to it, and nearly forces us meet the deadlines we’ve set.

So, this doesn’t answer our ‘how’ question yet, but we’re really not going to know the how until we start doing something. Let’s just assume (tell ourselves) that we can’t fail, regardless of where we start; then start, and then keep making course corrections until we arrive at our destination.

Keep in mind that the larger the project we’re able/willing to tackle, the more help and attention we’ll get from those that can help us get what we want.

It’s like the difference between using a magnet the size of a pea to pick iron out of some dirt, or using a magnet the size used to pick up cars. The last one is gonna pick up a lot of iron.

Go back and study the use of OPM (leverage) as described by R. Kiyosaki.

Read anything by Barney Zick. Read anything from Robert Allen. These are two incredibly valuable resources for creative real estate financing/options/leverage.

If you want a head start for raising some cash, and learning how to negotiate and make deals, check out the wholesaling, or lease/optioning video (testimonials) training, offered by Todd Toback.

OK, that’s all I got for now.

7

Is any of these posters giving advice filthy rich or financially well off? If not what makes your advice solid? Not interested in how much equity you have or how many deals you done but instead do you have a $1M plus liquid in the bank you have access to now that was made from real estate. That’s who you should listen to, no pun intended.

8

Hard work and determination!

9

It would be great if you could contribute some better ideas than what has been presented.

10

I think you need to change your focus from making millions to offering quality service and money will take care of itself.
Secondly hope you enjoy real estate and are not just getting into it for the money.The truth is every industry/business has it’s low moments and if you don’t love what you do,i don’t see you continuing with this investment for long.

11

If you have rich parents you can borrow or take $ 100.000 for a down payment on a $500.000 condo but if you have no income and mommy and daddy your Co dependents can keep writing you checks so you can go out and buy real estate, see the rich parents give all their assets to thirty children meaning expensive real estate that real estate keeps going up in price leaving their children and grand children wealthy, for example look at the Kennedy dynasty every single one of them own real estate that’s worth over a million…

12

If the goal is $1M a year by year 15, let’s work backward to find how this calculates with a non-compounding, straight-line rate of growth.

Year Annually Monthly Weekly
2028 $1,000,000.00 $83,333.33 $19,245.57
2027 $933,333.33 $77,777.78 $17,962.54
2026 $866,666.67 $72,222.22 $16,679.50
2025 $800,000.00 $66,666.67 $15,396.46
2024 $733,333.33 $61,111.11 $14,113.42
2023 $666,666.67 $55,555.56 $12,830.38
2022 $600,000.00 $50,000.00 $11,547.34
2021 $533,333.33 $44,444.44 $10,264.31
2020 $466,666.67 $38,888.89 $8,981.27
2019 $400,000.00 $33,333.33 $7,698.23
2018 $333,333.33 $27,777.78 $6,415.19
2017 $266,666.67 $22,222.22 $5,132.15
2016 $200,000.00 $16,666.67 $3,849.11
2015 $133,333.33 $11,111.11 $2,566.08
2014 $66,666.67 $5,555.56 $1,283.04

The issue is creating a map to make this come true.

If we can establish a $5,555.56 monthly annual pre-tax income doing “something” in real estate, the question comes, “How much of this income stream can be scaled to reach our goal?”

If it won’t scale, to reach $1M/yr, then what else can we add to this income stream to achieve that goal?

Just for fun, let’s see how many units we need to own in order to capture that $1M income.

If each unit pushes off $50 dollars in cash-flow, that’s $600 a year.

We divide $1,000,000 by 600 dollars. That means we would need to own 1,667 units with a 600-dollar, annual cash-flow to reach our goal.

Let’s say we make $100 off each unit per month. That means we’ll need to own 833 units.

Let’s say we make $200 off each unit per month. That means we’ll need to own 422 units.

And let’s say we capture a whopping $400 off each unit per month. This means we need to own 221 units.

How fast could we find two hundred units, that in fifteen years would be pushing off $400/mo in cash flow? Let’s say we had to give away half that money to partners. Then we’d invest in 442 units, still split those profits, but realize that $400 in cash flow.

Of course there’s mortgage pay-down, inflation, appreciation and just plain good luck in finding and buying under-performing projects that would increase our bottom line, or speed up reaching our goal.

Anyway, this illustrates how we can recognize where the markers should be, in reaching our goal(s).

13

Guru javipa has it right.

The library has FREE books and DVDs or CDs for inspiration and learning. This site has advice and critiques.

So it is all up to you. I like to ask…What are you earning now? How are you spending it? Are you paying for a roof or is it free? Do you have personal debt and what are you doing about it?

Start with a simple plan. Clean up your own finances first. Then tackle the future.

Furnishedowner

14

Javipa - I love your comments! Very inspiring and true!! :beer

15

Thanks!

16

Really? I guess I better give my 12 unit, 64 unit and 165 unit complexes back. I’ve been involved in hundreds of such transactions, both commercial and residential and have NEVER EVER put up more than $10.

Don’t bother. The BEST Guru/s can be found right in your own local REIA. These are men and women whom have “done it”, and in your local market.

17

Let me a guess. A no name BS coach/author with only 4 posts is going to start writing anybody can buy a 50 unit apartment building with no more than ten dollars from his wallet with no experience in real estate investing. Complete nonsense. With the aftermath of the housing crisis, no lender is going to be that wreckless with their money.

Also let me guess you are not on here to sell $35K coaching or plug your e-book to provide that fraudulent experience gap either, right? I’ve also been buying to own and selling apartment buildings and plazas for over 17 years and I’ve also been a realtor. I know how it works, noob.

I’ve bought apartment buildings with no money down before, but that required owning another apartment building just as large where two second mortgages from the vendor where done to cover the downpayment. One on the building purchased and the other on the second apartment building I owned. I’ve also used credit cards and a lot of equity from a luxury house in another city as collateral to buy an 18 unit apartment building and I almost maxed myself out because I underestimated the repairs and tenant problems due to the misinformation I received. But for somebody to just walk off the street without already owning real estate and investing experience is ridiculous. Do you really think experienced landlords with all the bs presented by tenants and rental applicants are just going to naively sell an apartment to someone who walked off the street with no equity for ten dollars??? IT’S INSULTING TO THE INTELLIGENCE OF EVERY LANDLORD ON THIS FORUM TO HEAR THAT!!

I don’t think you own property yourself. You’re just pulling nonsense you pieced together from other scam articles to sell your coaching services. The moment I see some noob with 4 posts put “author” under their name I see the crap coming to a forum near me a mile away. Get a clue.

18

Google him…then Google his affiliation, “North American Realty Services, Inc.”…not so good.

19

Wow! If he is asssociated with these guys, No wonder he is an “Author” now…LOL http://dbf.georgia.gov/press-releases/2008-07-11/license-revocation-north-american-real-estate-services-inc-dba-pacific

20

From what I can tell, it appears he’s affiliated with North American Realty Services, Inc like Keith said. If you do a search for “North American Realty Services” there are some entries down the page for “North American Real Estate Services” which is the company that has some negativity attached to it. I didn’t actually see much for North American Realty Services except for a bunch of different sites with his profile on there and him listed with that realty services company.